Element Solutions Inc (ESI) Earnings Call Transcript & Summary

All right. Thanks, everyone, for coming back. So Josh Spector, UBS North America Chemicals and Packaging analyst. Happy to be joined on stage here with Element Solutions. I have Ben Gliklich with me, Element's President and CEO. Ben has been ESI's CEO since formation in 2019. And prior to that, in the COO and business development role of predecessor firms in addition to prior roles and responsibilities, other firms ahead of that. Before we get started, just as a research analyst need to provide disclosures on the relationship of myself, and that UBS with any firm, which I express with you on the call today available at www.ubs.com/disclosures. Feel free to e-mail me. So with that, again, welcome Ben to the stage. Thanks for joining.

Good to be here.

We're generally just going through a Q&A format. So I have questions that go through. If anybody in the room wants to jump in, raise your hand, and I will see if you can shout loud enough for us to hear, and we'll try to work that in.

I think the first place to start, you had an announcement last night about divestment of your graphics business. So high level talk about what drove that? And anything else you comment maybe strategically around the portfolio and mix of businesses and how you're approaching that?

Sure thing. Thanks for the question. Good to be here. Thanks to the audience for joining. So Graphic Solutions, Graphic Packaging business provides flexographic printing plates used in the production and printing of flexible packaging. And this is a high-quality business. It's been in the portfolio for a long time. About $140 million of revenue. And we'd always characterize it as less core, not noncore but less core. Less core because the manufacturing process is different. The customers are different. The technology is different. Capital intensity is different. And in saying it was less core, we said we're not going to put a for sale sign on this business. But if someone wants to own it, they'll register their interest and we'd be willing to part ways with it, and that's what happened. So we were approached by Access, which is a player in the flexographic printing market. They put forward a compelling offer. This was a time where they really wanted to own this business. They've got some synergy content with that. And we signed a deal, announced it yesterday to sell that business for $325 million. It's about 11.5x trailing 12-month EBITDA. The business will contribute in the forecast about $30 million, $31 million to 2024. What does it do for the portfolio? So the graphics business is a good business, but it doesn't have the same growth dynamics that we have in our Electronics portfolio, for example. So the portfolio now is more than 65% Electronics. If you were to look at the earnings trajectory of this business back to 2019, so say 2019 to our 2024 guidance, constant currency EBITDA growth of about 6.5% is implied by our guide, CAGR. Ex Graphics, it's about 8%. So it's a growth accretive divestiture. It's a margin-accretive divestiture. It's a return on capital accretive divestiture. And so we believe we've improved the portfolio through this transaction.

I think that makes sense. And I guess just it opens up the question then with the other parts of, I guess, the nonelectronics business, industrial specialty, energy, I imagine it's a similar approach as someone knocks on the door, there's maybe an opportunity. But can you talk about what's core, what's non-core? And does this open the door to anything else to happen?

Yes. Look, we've characterize both the graphics business and the offshore business as less core. There's quite a bit of overlap between our Industrial Solutions business and our Circuitry business. We're not emotional about any of our businesses. And if someone wants to pay us an attractive price for our assets, we're open-minded, but there is no planned further portfolio activity, further divestiture from here. We're very, very happy with the portfolio, how it's positioned, the growth opportunities in each of the businesses, and we're going to continue to run them for the long term going forward.

What are the priorities for the cash that's coming in from the transaction?

So there's a regulatory process associated with getting this transaction closed. And so we've said that it will close somewhere around the end of this year or early next year. And so the opportunity is available to us change every day. What we said in our release is general corporate purposes and to reduce leverage, which may very well be building cash and waiting for a great opportunity to deploy that capital. In general, our approach to capital allocation is consistent and unchanged, which is to say, we invest behind our businesses with a goal towards compounding EPS. That's looked like buying back 20% of shares outstanding over the first 5 years of Element, and putting a little under $1 billion into accretive M&A. And I would expect those to be the primary path from here, but we have paid down some debt over the past several years as well as interest rates climbed.

That actually works, but I wanted to talk from a high level from a strategy perspective. I still think ESI as a company is still somewhat young in the space. And I think for investors, there's still some grappling of what exactly the mix is and kind of what you aim to achieve over time. So you had an Investor Day a couple of years ago, you talked about algorithms. I guess where you sit today? If you're successful, I guess, how do you think about returns, growth? And what do you expect investors to see from ESI looking 3 to 5 years out from today?

So we heard a very interesting point relative to both the cycle and the secular drivers propelling our business. And the transaction we announced yesterday only further enhances that positioning. Our Industrial businesses have been bumping along a pretty mediocre macro environment for the past, let's call it, 6 quarters. The Electronics businesses are coming off of the deepest trough they've seen in 20 years. So we've got a cyclical recovery coming. At the same time, there's secular growth propelling the electronics business. And we're key enablers of advanced packaging and the proliferation of computing power to the edge of the network. And if you had asked us 3, 4 years ago, what the next leg of growth in electronics was going to be, we would have said 5G, we would have been wrong. But it's clear. We see it in the market that industrial automation, AI, are gaining traction and absorbing capacity in the electronics market. And so sitting here today, we see both a secular growth vector that's accelerating and a cyclical recovery. What that translates to is mid- to high single-digit revenue growth over the medium term. Operating leverage on that revenue growth getting to high single-digit EBITDA growth. And pretty significant capital allocation opportunity because these businesses generate significant free cash flow, and the balance sheet is approaching its lowest level of leverage since we've been Element's subject to this transaction we announced closing. So we can deploy that capital at compelling returns behind our businesses to drive EPS, which is the North Star of the business of the company.

Maybe coming back to a little bit near term, you talked about just the general direction of things. But if I think about now versus 1.5 months ago or so when you gave guidance, anything changed either the comment around smartphone cycle, autos, something else to consider? Just knowing that your guidance is maybe somewhat conservative on which way the cycle would trend? Where do we sit today versus that expectation?

I wouldn't say there's anything new over the past 6 weeks from a macro perspective. The electronics market is continuing to recover. We saw that momentum through the beginning of Q3. The industrials markets remain as they were. And as I characterized them just a minute ago. We'll see new smartphone platforms launching in the next couple -- in the next month or so. And the pull-through of demand from those launches will be the indicator around where we're going to land in our full year guidance range. And we'll give an indication also as to acceleration in 2025. But it's early to call that. I would say the macros are unchanged from the guide we gave a couple of weeks ago.

Okay. Fair enough. So just maybe focusing on the Electronics portfolio. I think the mix of businesses has been something that's been discussed a lot over the last few years. And I think it's interesting where some of the framing of the portfolio now is maybe the mix of businesses is actually more an advantage than maybe what we thought 4 or 5 years ago, just given some of the densification around semi packaging. So maybe can you talk about what that value proposition means? How that translates to share? And how you think about the relative portfolio mix today?

Yes. So evolution in electronics hardware technology has played in our favor. Going back, the advent of semiconductor, Moore's Law was the driver of innovation, right? More transistors in the same amount of space drove more computing power and lower cost. And that started to break down in the past couple of years, and that's translated into new chip architectures. And the standard approach of smaller nodes has converted into a completely heterogeneous approach to packaging. So every OSAT and even OEMs have their own frameworks for how to get more computing power densely to enable faster processing speeds that are required by edge network, by 5G, by AI and so forth. Our portfolio is the only portfolio in the electronics industry that speaks to all of the interconnects from the circuit board through to the chip down to the silicon. And those interconnects are increasingly important as these chip designs become nonstandard. So our seat at the table with the OSATs, the folks developing these designs is bigger. And we really are an enabling technology, and that's translating into a lot of mind share and traction with the specifiers. And that's not something that converts in one day through the P&L. But anecdotally across the business, our applications labs are full of higher-level designers and engineers than they've ever been. And that's a great leading indicator for market share. And it's not just market share revenue dollars. But where your value proposition is differentiated, we capture that value. And so that's margin enhancing. So we see the growth trajectory accelerating, and we see the margin trajectory also as positive translating into an acceleration in our earnings algorithm in the medium term.

So I guess building off that, when you talk about dealing with OSATs and maybe some different customers. Are you getting spec-ed into those applications? And can you talk about the time line? So when you're having conversations now, how quickly does that translate to a product design? And when realistically does that become revenue?

Yes. The product cycles are -- they're very variable across the different technologies. So front-end semi is very different than the assembly customer set. But we're seeing real traction and real conversion in our circuit board assembly with new alloys, higher reliability alloys that are reducing the total cost of ownership or total cost of -- to our circuit assembly customers. And we're -- and that's translating to revenue in the current period. The front-end semi opportunity, we see our share position really growing. And we've seen some backwards integration where we've actually displaced current process of record. That's a 6-, 9-month cycle. We're starting to see that through the P&L here today. And then we're winning lines on newly built or under-construction fabs, and that's a multiyear cycle. So it's a mixed bag, but our line of sight and conviction in those share opportunities grows every quarter.

Okay. And I guess when you think about exposure to where you gain share. So I mean, I think with Heritage ESI talked more about autos, smartphones. I guess, should we be thinking more about data centers or other factors in terms of how that plays in. And really what I'm trying to get at is when we think about the increase in content opportunity, whether it's packaging or something else, what markets do you focus on where that's having a higher value sooner and could be more accretive to Element?

So in electronics, the growth vectors are advanced packaging applications, new technologies for front end, power electronics, which speaks to semi assembly and is also driven by electric vehicles, but power density isn't just an electric vehicle problem. It's a data center problem, and it's a green energy transmission opportunity. I'm reluctant to say this market or that market. The one way to characterize this is to think about electronics manufacturing capacity is largely generic, right? So if you went back a few years, when there was a COVID surge in demand for smartphones and peripherals and laptops, there weren't enough chips for the automotive market, right? Today, we're hearing that AI is absorbing so much leading-edge chip capacity that there might not be enough chips for certain smartphone applications, right? So all of these new emerging electronics technologies are absorbing capacity in the electronic supply chain, particularly at the leading edge, which is driving incremental investment in new capacity, which drives volume growth for us. And when you're at the leading edge, the value proposition, the technical requirements are more challenging -- with more challenging technical requirements, you get higher margins because there are fewer solutions. And so that's where we're focusing.

Okay. Maybe thinking a little bit more near term. So in the recent quarter, you had very strong performance in semi, but that was offset by some weakness in power electronics or maybe less improvement because of what's going on in that market. How many quarters or how much time needs to go by until that normalizes and you see kind of a uniform growth across that portfolio? Is that an EV-specific issue that will last? Or is that something specific more within recent quarters that we should lap more quickly?

So the power electronics portfolio today is largely in high-performance electric vehicles. And it's concentrated in a certain OEM. And that certain OEM produced fewer units in the second quarter, and we saw that in the P&L. And that has been a pretty strong growth vector for the business over several years. The silver lining is that we have an opportunity not just from that OEM producing more units, which has started in the third quarter, but also from penetrating other OEM supply chains. And we saw that. So in the second quarter, we had more than -- we had 50% revenue from other OEMs in that core one. In China, with some of the emerging Chinese OEMs, and also in Western OEMs, who haven't stood up their own EV supply chains, they're using tiers right now. But they're in the process of building their own EV supply chains, and we're in pole position to win that business. So the growth isn't just from EV penetration. It's from our penetration of the EV market. There's a lot of room for us to run. We've got a great capability there, highly differentiated and high value. So yes, there was a bump in the road in the second quarter. Third quarter is back to growth. And the runway from here is very exciting.

Yes, it's an interesting point. I guess, so then when you think about OEMs or existing OEMs trying to optimize and improve their product mix, I guess, again, kind of along the lines of time line, and thinking about how long does that take to work in something like Element's products. So I don't know, 50% is that much bigger than what it was a year ago. When does that become an even broader scope, is that multiple years? Or is that more of a near-term horizon?

Different OEMs have different product life cycles or product -- new product cycles. And so the Chinese OEMs were able to bring electric vehicles to market in under a year. They were using standard off-the-shelf capabilities. Now they're competing on performance. They're adopting our technology. That happened quickly. In the West, that's a 5-year cycle. And so we're going to see gains from this technology incrementally pretty steadily for many years as the different supply chains adopt the technology as they do, we can't force that adoption, right? They need to stand up the supply chain. They're working with us. They will use our material, but we can't get the material into their supply chain until they're ready.

Okay. Maybe going back to the packaging side or advanced packaging. So I found it hard to kind of have the North Star. This is how the industry is growing. This is what it means. We've done some work ourselves to try to quantify and think about what that means. But I guess, how are you looking at that? What benchmarks are you looking at to say, this is how that part of the industry grows. This is what our share could be. This is what it means for you?

Yes. So advanced packaging is a somewhat generic term, and our portfolio participates in advanced packaging up and down our electronics offering. So our front-end capability who would think you'd question how does that play into packaging? But wafer-level packaging. So putting chips on to wafers actually uses our front-end capability. So even our -- what we consider semi-fab products, some of them go into advanced packaging. Obviously, our semi assembly business is very focused on advanced packaging, but our circuitry business as you're getting very high-end dense, we call IC substrate circuit boards, they're using our chemistry for packaging substrate. And our assembly business also has some fine pace that go into advanced packaging. So advanced packaging is lifting not just our semi assembly application set, but our broader portfolio of products. But to be a little bit more precise, we look at production volume forecasts of specific types of chip technologies, flip chip BGA, for example, and what folks expect those to grow at. And our view is that, that type of technology is going to grow in the 10% to 15% range for the next 5 years off of a reasonably low base today. And given our offerings, we think we can outgrow that market for that category of applications by at least 10 points. And so our semi assembly business is a 20% grower. And today, it's a single-digit percentage of our overall electronics business, and that will obviously change significantly given the divergent growth characteristics in that line of business. But our other lines of business will also outgrow the market because of their capabilities and offerings in advanced packaging applications, which are faster growing than the base rate for those applications as well. And putting that all together, we get to our electronics business growing revenue in the high single digits for the next several years.

Yes. And I guess to that point, you've made that proclamation not too long ago. I mean, obviously, we're at the point where the cycles turn and there's some benefit. But I guess the question is a little bit more why now. So the confidence in being able to extend that high single digits beyond the cyclical and kind of -- I don't know if I should say, a seamless transition into secular growth, but is there visibility in your pipeline to say that we're going to be able to sustain this with, I don't know, some sort of linearity? Or do you expect it to be a much bumpier road than that?

Secular growth isn't linear. So it's hard to say that this is going to be a consistent growth year in, year out. What I think we've proven is that on the years where we have seen a drawdown, if you will, or a decline, the subsequent year, we recover. And so you can extrapolate volatility around an upward trend. And all that we're seeing is that upward trend. The slope of that upward trend is increasing. And I think that market research and expectations for these markets supports that. This is an Element using its own forecasts for the market. This is Element understanding its offerings and committing to outgrowth relative to an accelerating market. And that outgrowth is based on our pipeline, our customer traction and opportunities we're working on.

So going back to the assembly comment, and particularly when you're talking about 10% outgrowth in some of that semis materials, is that all added content? Or I guess, if you separate that between added content and share of maybe existing content. How would you separate it and build that level of outgrowth?

It's new applications, right? So it may be existing technology, some of it is new technology, but it's growth in what are today's small categories within the packaging market, but that will grow driven by demand for things like high-performance compute and power electronics.

Okay. How much do EVs matter to the portfolio these days? I guess maybe focus pretty much squarely on electronics, but thinking about the Industrial and Specialty business. So maybe the transition to slightly more hybrids, at least in Western markets, pros and cons of some of those moving pieces.

So hybrids are good for the Industrial and Specialty business because they had been nuts, bolts and fasteners for engines and all the fasteners you have in electric vehicles. There are a little bit of a goldilocks for the Industrial and Specialty business. When the engine goes away, you lose some of that content. It's recaptured on the electronic side. We have power electronics and more circuitry. So the hybrid market is better than the ICE market for Element. It's probably not as good as the pure battery market for Element as a whole. But there is a content uplift when you go from an internal combustion engine car to a comparable hybrid car. Electric vehicles, again, so on that same basis are helpful to Element, but more on the electronic side of the portfolio than the industrial side of the portfolio.

Okay. And I guess we talked about semis, a little bit about circuitry, talking about the assembly business and maybe dovetailing that with EVs and autos. I go back to your prior Investor Days, there was a lot of talk about upgrading that portfolio, new mix improvements. The power electronics was maybe a piece of that. But where are we today on that evolution? Are you realizing a much higher gross margin on some of those products today? Or what's the path that you look at over the next few years?

We've absolutely high graded that portfolio. We've moved away from more commodity bar solder and wire products. We still sell them, but we sell them in very specific higher-margin avenues where we're getting a benefit because it's a specific alloy where we're realizing value or it's recycled material, which is differentiated from competition. But that market is softer, right, than the leading-edge electronics market today, right? The assembly portfolio is more broad into industrial applications, automotive applications, even white goods in some cases. And just like our Industrial Solutions portfolio, the macro there hasn't been outstanding. And so there should be some cyclical recovery as you see economic improvement in coming quarters. The profitability of that business continues to improve. And we've made great progress from a technology perspective, introducing new alloys, introducing frameworks to help our customers understand which materials to use and how they can use them together to get certain performance attributes. And that's a very compelling offering, it's called the Reliance tool. We've talked about it a bit, that's gaining traction in OEM supply chains.

Okay. maybe for me to step back or zoom out a little bit within electronics. So you put a lot of this together, what do you need to do to capture growth above market? Is it just the nature of the portfolio, what you have is attractive, which drives a lot of that, compare that versus R&D, technical support, acquisitions and technology, how do you put that all together to really achieve that high single-digit growth target your target you're working towards?

So we have what we need today. There's nothing missing in the portfolio in terms of technologies. We've got a highly complementary portfolio of leading technologies. No acquisitions are necessary. The Kuprion transaction we did last year, the ViaForm transaction we did last year, that gives us further confidence in our ability to outgrow because those are new technologies we can bring to market. So by and large innovation in our markets is customer-led product development, taking what works today and making small tweaks to it to make it work for the next application. And because of our customer intimacy, we understand what the next application will be. And so we can innovate to enable that. So we don't have to do a lot of basic research trying to come up with the next thing. What will enable our outperformance is the portfolio we have today, strong commercial and technical execution, and really converting the traction that we're just starting to get just over the past couple of years into the P&L. And that's within our control.

Maybe you could talk a little bit more about Kuprion in terms of what that is, the opportunity? I mean you've been more and more excited about that over the last year or so. So where is that today?

So Kuprion was a technology we brought into the portfolio in June of last year. So it's pretty new. And it's a nanoparticulate copper that has very exciting attributes for leading-edge electronics applications. It really enables our customers to do things that couldn't do before around power density, around thermal management. And it was a material science that we acquired that had shown certain performance attributes that were very compelling. And over the past year, we've built -- we've sort of productized it. We've done demos and samples with customers to show that it works. The customers are incredibly eager for this material. We've actually had to slow down customer engagement because we want to stand up our supply chain to make this at high volume before the customers start wanting to use it and spec-ing it into their designs. And so what we've said for the past quarter or so is that the focus today is supply chain. It was commercialization. Commercialization far exceeded our expectations. We'll generate revenue this year from Kuprion. We'll generate EBITDA next year from Kuprion, but supply chain is going to take some time because this is a new material, and we will discover things as we scale up manufacturing that we don't know today. So for at least a year, the answer around Kuprion is going to be supply chain, commercialization has been very exciting, I would say, to date.

How does that change your -- talk about the revenue opportunity maybe there and just your comments around commercialization and that going maybe better to plan? Has anything changed in terms of how you think about the scale of what that opportunity could be once you work out supply chain?

Yes. So by enabling new designs for our customers, we are creating a huge value opportunity for them, and we will capture that value in margin. So the revenue opportunity here, it's not a big volume product. It's small volumes at high price points. The earnings, the EBITDA potential is quite significant. But for those volumes to come through, we need to stand up supply chain. The way we structured the transaction was an upfront payment and then earn-outs based on product qualification and revenue. And we'll end up paying $275 million to the sellers when this business hits $100 million of revenue. We had given them 6 years for it to hit $100 million of revenue. It should hit $100 million of revenue, just to sort of quantify this. And I'm hopeful based on the demand we're seeing that we can do that before the 6 years are up, which would be 2030. The incremental margins on this are very, very high. So it will be a material contributor in the medium term for the business.

Does that open up any additional doors for you in terms of new opportunities? So I guess, ViaForm kind of somewhat that way in terms of that acquisition then led to some additional conversations. Does this have that element to it at all? Or is that not the right way to think about it?

It absolutely does. There are -- when you bring new technology to market, you get better engagement with higher level engineers at the customer. And this is truly game-changing technology. And so our seat at the table once again is bigger than it had been. And as with every company, there are some customers that you have more share with than others. All customers at the leading edge in circuit board fabrication, in particular, are interested in this material. And so that is helping us make inroads in customers where we might be underrepresented.

Okay. And then, I guess, going back to the point around packaging and some of that and particularly maybe dealing with some of the OSATs instead of some of the substrate producers. Does that have any difference in terms of I guess, whether it's innovation, like market share really kind of pricing with maybe a more fragmented pace that might need to rely on more support for how the design and innovate versus very large substrate producers?

So insofar as you get a specification, you have more pricing power. Specification is an OEM or a tier saying, you must use this material. Now 80% of our business is qualified or specified. But most of it is qualified as opposed to specified. So qualified means the material you use must meet a certain performance attribute. There are multiple vendors who can meet that performance attribute. If you're working more closely with OSATs, with the folks doing the design, you're going to get more specification, and therefore, you will get more value from the supply chain.

Okay. And I guess if we think about what some of this means then in terms of longer-term growth. So again, electronics more broadly, putting together the portfolio mix, some of the greater conversations with different parts of the supply chain. If you can maybe frame this in terms of why ESI versus some competitors, maybe not directly some of the same materials, there's a couple of them, but there's other pieces that are different. What is ESI putting together differently maybe versus what some peers or competitors might be offering?

It comes back to a comment I made earlier, which is that we're not the largest player in electronics materials, but we're one of the largest players in the niches in which we participate. And the way these materials that we offer interface is essential to the performance of high-value electronics. And so being able to generate collateral saying if you use this product from this one of our business lines and this product from this one of our business lines and this product from the third of our business lines, you will get a performance of X is very differentiated. No one else can do that. And again, it's anecdotes. It's specification versus qualification. It's traction with OSAT. It's senior engineers in our applications labs, but it's very evident in the day-to-day business that our reputation and our mind share is changing. And over time, that will translate into market share and value capture. And that's why ESI today is very well positioned, not just from the cyclical recovery, but to benefit disproportionately from the secular growth propelling the business for the end markets.

How does the growth of high-end data centers change anything? I guess when I think about when you're talking about thermal material management, obviously, energy efficiency is huge. Does that change the dynamic for ESI? Is that going to become a meaningful market for you? Or is it just too broad in the space of electronics?

No, look, these server boards are not just AI chips. They're very big high-density circuit boards. And so we metallize those, right? The thermal management is very important. Our thermal management portfolio is somewhat narrow, but has real applications in data center circuit boards. And then the chips aren't a single monolithic piece of silicon, right? They're heterogeneous packages, and that requires semi-assembly products. Power density we talked about, our Argomax offering. It's not just Argomax, but we have a product called Atrox which is a derivative of Argomax that has applications in high thermal circuit board assembly -- or semiconductor assembly. And then we've got this hard disk drive metallization business, which is a data storage business, right? So metallizing hard disk drives where we've got a strong share position, and there's more data being generated and hard disk drives, believe it or not, are the cheapest per bit way to store data, and that business is picking up as well. So data center proliferation is absolutely a tailwind, and AI data centers are consumers of a lot of our high-value material.

Okay. So I think spent most of this talking about electronics. I just want to spend a couple of minutes here on the Industrial and Specialty side of things. Just mainly thinking about -- you talked about that kind of still bouncing along the bottom. What do you need to see for that to change?

So 50% of the business is Automotive and 50% of the business is, we call it other. Think about equipment, building products, heavy machinery. We've seen some pockets improve and some pockets deteriorate, but sort of the average has been a slow growth, sort of weak demand environment. There are reasons to believe, and I don't think it's imminent, but there should be some recovery with interest rate cuts, political changes in Europe. The business in China, despite pretty negative headlines out of China has been better year-over-year. So I don't believe that this environment is indefinite. And I think that we're closer to the recovery than we are to things getting worse.

Okay. So I guess bring China, speaking around electronics and maybe not China specifically, but I guess, China diversification versus U.S. investments, ESI, good, bad and different in terms of what it does to your portfolio and your exposure?

The China plus 1 approach of the supply chain is happening. In midstream, we're seeing investment in Thailand and Vietnam and Mexico and Indonesia, and we are there already to greet our customers, investing in application labs or we need them and technical team where we need them on the ground. That's a benefit. Our margins outside of China are better than in China in the electronics business. We've seen somewhat meaningful share swings as folks have moved supply chain into Mexico, for example. And so that's a tailwind for us. That having been said, the business in China today in electronics is doing well. Both the domestic smartphone market there is recovering, and the export market seems to be bouncing back, particularly in smartphones. So China has been a tailwind in 2024.

Okay. I think with that, as you could see the clock is slowly ticking down to 0. I don't know if there's any final message or anything you want to say?

No, I'm grateful for the work you've done, Josh, to develop a deep understanding of our electronics business and the broader ecosystem. It informs the discussion, I think, makes this a meaningful conversation.

Well, thanks. I appreciate that and appreciate everybody joining. So I hope everyone has a good rest of the day and obviously reach out to us, Ben or the IR team at Element Solutions for further details.

Thank you.

Thanks.